“Giving money and power to government is like giving whiskey and car keys to teenage boys.”
By Alden Benton
California finances large projects in two ways: general obligation bonds and revenue bonds.
General obligation bonds provide up-front funding for major projects. Investors buy general obligation bonds and repayment, with interest, is over a long period.
The California general fund backs repayment of general obligation bonds. California state income tax and sales tax revenues comprise most of the general fund.
To finance projects on a pay-as-you-go basis, California uses revenue bonds to finance projects such a bridges, or toll roads. The state sells bonds to investors and the revenue from the project repays the bonds and interest.
The California Constitution requires that voters approve general obligation bonds. Current law does not require voter approval for revenue bonds.
Proposition 53 requires voter approval of state revenue bonds that meet all of the following criteria.
Proposition 53 exempts revenue bonds sold by cities, counties, schools, and special districts from statewide voter approval.
Proposition 53 requires that the bonds sold must be for a project that is funded, owned, or managed by the state. This measure also prevents separating a single project into multiple projects to avoid voter approval.
This measure applies to revenue bond proposals exceeding $2 billion. Proposition 53 would increase the $2 billion voter approval threshold amount annually by adjusting for inflation.
© 2016 A. L. Benton/Independence Creek Enterprises
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